Did Fracking in Pennsylvania Turn Democrats Into Republicans and Republicans Into Democrats?

See ‘Now They’re Voting Red’: A Pennsylvania Fracking Boom Weighs on Biden’s Re-Election Chances: Economic churn is pushing voters toward Trump in the Pittsburgh area, potentially overwhelming Democrats’ base of college-educated workers by Aaron Zitner and Kris Maher of The WSJ. Excerpts:

"Pittsburgh is at the center of a class inversion between the two parties that is redefining American politics. Democrats have traded their former blue-collar base for professional-class, metropolitan workers, while Republicans have become overwhelmingly dependent on working-class voters concentrated in far-flung suburbs, small towns and rural areas.

In Pennsylvania, the largest 2024 battleground state, President Biden’s victory four years ago depended in large part on big gains among voters such as [Josh] Thieler, a software company manager and former Republican who is now part of the city’s heavily Democratic professional class. But those gains have been overtaken by opposition from voters like [John] Sabo, who works in the natural-gas industry, a sector that has given a boost to blue-collar workers in rural counties.

These energy-economy voters see Biden as hostile to fracking, which taps natural gas trapped in sedimentary rock deep underground. The sector has drawn billions of dollars in new investment in Pennsylvania, much of it in the state’s southwest corner.

Biden has been particularly hurt by his decision to cancel the Keystone XL oil pipeline, which local companies say cut into demand for their services; and his order this year to pause new permits to export liquefied natural gas, which could deprive drillers of new markets. Many of these voters also believe the president’s push for Americans to adopt electric vehicles will undercut jobs tied to fossil fuels.

The area’s reliance on energy jobs helps explain why Democrats look to be losing more voters than they have gained here despite a Biden agenda that’s pumping billions of dollars into infrastructure and manufacturing."

"There is little sign that Biden can regain substantial support in seven largely working-class and rural counties that surround the city, every one of which produced a larger vote margin for Trump in 2020 than in 2016. The resistance to Biden’s energy policies is making it harder for the incumbent to stop his party’s decline among noncollege voters there, forcing the party to wring more votes out of a Democratic base elsewhere that, so far, seems dispirited."

[there is] "a breed of progressive Democrat new to Pittsburgh, among them Rep. Summer Lee and Sara Innamorato, the top official in Pittsburgh’s county, who oppose fracking. They say the risks to residents’ health and the environment, as well as the effect on climate change, are too great, and that the region should prepare for energy jobs to shift toward renewables."

"In the 2000 presidential election, Democrats carried this part of the state—Pittsburgh’s county and seven neighboring, more working-class counties—by nearly 86,000 votes. By 2020, Biden lost by a net 38,000 votes in those same counties. Allegheny County, which includes Pittsburgh, produced a far bigger margin for Democrats than it had two decades earlier, a 56% gain. But that was more than erased by landslide losses in the lower-income counties nearby."

"Once, Pittsburgh and its surrounding counties were largely unified in a single economic and political ecosystem of industry, unions and Democratic leadership. Steel and manufacturing plants were dotted along the two rivers that converge in the city to form the Ohio River, a transportation gateway to the West and South. Then, steel collapsed, with big job losses coming in the 1980s. The region started shedding population.

At its likely peak in 1952, manufacturing employed about 379,000 people and accounted for 40% of all jobs in the region, according to regional economist Chris Briem of the University of Pittsburgh. Thousands more jobs were indirectly related. Today, only 85,000 work in manufacturing, he said.

The fracking industry hasn’t filled the vacuum, but it has created high-paying, if cyclical, jobs in communities that had little to offer the blue-collar workforce. In Zelienople, a starting laborer can earn $85,000 a year right out of high school at Deep Well Services—“far more than their fathers ever did,” said Sabo, a company vice president.

"Those workers can then climb in responsibility to jobs that top out at $200,000 and even $250,000 in annual wages, a level now hit by about 60 employees, Sabo said. The work is hard, involving 28 days on the job and then 14 days off as part of teams that prepare wells to extract natural gas."

"Many workers in this part of the state say their jobs cement them to Trump and the Republican Party. While they criticize Biden’s stances on immigration, social issues and military funding for Ukraine, they often point to decisions that they believe directly affect their livelihoods in explaining their votes."

"An inflow of new workers, many of them foreign-born, has transformed city neighborhoods. In Lower Lawrenceville, once home to one of the nation’s oldest populations, the number of residents with a bachelor’s degree has more than doubled from a decade earlier, census data show, and the number with a more advanced degree more than tripled. Incomes rose as well, with median household income topping $90,000, more than twice the level of a decade earlier, adjusted for inflation."

"Thieler, the progressive Democrat who lives just north of the neighborhood, recalls a childhood in Uniontown, where his great-grandfather once owned a small coal mine that failed. He grew up listening to conservative talk radio and never questioned the Republican politics of his family. But he said that changed after he moved to Pittsburgh and took his first job at a startup in the city that made software to help hospitals track patients.

He credits his political shift to his exposure to more diverse people and issues in the city, including racial injustice and homelessness."

"The Pittsburgh neighborhood of East Liberty, home to Duolingo [Language app-maker Duolingo], has seen its own transformation as a tech hub. An old Nabisco factory site nearby now houses several artificial-intelligence companies and the Ascender Pittsburgh incubator, which is fostering startups in education, payroll services and other areas. Google’s offices are across the street."

"While many Democrats say they don’t recognize the Republican Party that has been reshaped by Trump, others here say it’s the Democratic Party that has changed most.

“It used to be a conservative, middle-of-the-road Democratic Party,” said Alan Benyak, a Washington County lawyer and member of the Democratic State Committee until 2022. Now, he’s a registered Republican.

“I’d go to a state committee meeting and feel like a dinosaur,” he said. “With this war on the fossil fuel industry, which is still big in Washington County, it was like I was swimming upstream.” 

Benyak marvels at how deep the political divide has become between Allegheny County and those that border it.

“You’d think we’d all think the same way, somewhat,” he said. “We’re all from the same area, generally, within 20 miles of each other.”"

Related posts: 

Are some blue jeans really Democratic and others Republican? (2019)

People say the president can control gas prices if the president belongs to the other party (2017)

Adam Smith Meets Jonathan Haidt (on political polarization and the animosity of hostile factions)  (2023)

Why Tribalism Took Over Our Politics: Social science gives an uncomfortable explanation: Our brains were made for conflict (2023) 

Democrats and Republicans say economy is improving, but mostly only when someone from their party is president (2024)

See also Americans start caring more about deficits and the national debt when the party they oppose runs them up by John V. Kane of New York University and Ian G. Anson of The University of Maryland. Excerpt:

"In the past two decades, US budget deficits have skyrocketed, and the national debt is now over $22 trillion. But do Americans care about the size of deficits and the national debt? In new research, John V. Kane and Ian G. Anson find that people tend to care more about the deficits and debts when they are increased by presidents from the party that they oppose. Both Republicans and Democrats, they write, become less concerned about governments running deficits when their President is in charge."

Meet the Robots Slicing Your Barbecue Ribs

The meatpacking industry is investing billions of dollars to automate notoriously difficult jobs

By Patrick Thomas of The WSJ. 

Do businesses replace workers with robots or other capital to cut down on costs? Or do they add robots because there is a labor shortage? Or, as mentioned in some of my related posts, do robots and humans complement each other?

If robots and humans are substitutes, if the price of human labor rises then the demand for robots would increase. The article mentions a labor shortage in the meat industry. If market forces are allowed to work, then a shortage should lead to a price increase which then means an increase in demand for robots. Many articles I read on shortages never mention that price is below equilibrium.

Excerpts from the article:

"In Denison, Iowa, a robot spends eight hours a day slicing apart hog carcasses at a plant owned by Smithfield Foods. It serves a dual purpose: producing more ribs for barbecues and smokers, while helping ease the U.S. meat industry’s long-running labor shortages. 

Meatpackers are increasingly looking to robots for help. Smithfield, the largest U.S. pork processor, began rolling out automated rib pullers at its pork plants several years ago, which company officials said helps leave less wasted meat on the bone and relieves workers from some of the industry’s most physically demanding jobs—allowing workers to be reassigned from pulling loins or ribs to food-quality inspection jobs."

"Raising wages or offering signing bonuses to attract plant workers eats into processors’ profitability. Meat companies are collectively spending billions of dollars on automating some of the more-difficult plant roles, which they said can improve staffing and safety while cutting costs.

Meat processors said they don’t see automation replacing workers or leading to layoffs, partly because turnover in plants is already high and the goal is to move workers to more skilled, harder-to-fill roles."

"The U.S. meat industry, with more than $200 billion in annual sales, is under pressure to run more efficiently. Profit margins across the three major protein segments—chicken, beef and pork—were strained over the past year as operating costs increased, chicken and pork prices fell and cattle herds dwindled."

"Fully autonomous processing operations are still a long way off and carcass-scanning computers can’t yet match humans’ ability to disassemble and debone larger cattle and hog bodies that slightly differ in shape and size."

Related posts:

 

Robots writing science fiction (2024)

 

Robots Are Looking Better to Detroit as Labor Costs Rise (2024)

 

Are robot vehicles replacing workers in freight yards, warehouses and seaports or are they being used because it is hard to find workers? (2023)

 

Sweetgreen Hires Kale-Shooting Robots to Speed Up Service  (2023)

 

“Why did the human stare at the glass of orange juice?” “They were trying to concentrate.” (2023) (this post it partly about jokes written by ChatGPT)

 

Will technology cost artists their job? (2023)

 

Rent a robot for Christmas? Makes sense if you are a logistics company (2022)

Walgreens Turns to Prescription-Filling Robots to Free Up Pharmacists (2022)

Answering the Call of Automation: How the Labor Market Adjusted to the Mechanization of Telephone Operation (2022)

Warehouses Look to Robots to Fill Labor Gaps, Speed Deliveries  (2021)

Is unemployment still high because of structural unemployment?    (2021)

The Pizza Delivery Guy Will Be a Robot at Many Campuses This Fall  (2021)

Many Jobs Lost During the Coronavirus Pandemic Just Aren’t Coming Back (2021)

Can computers write poetry?Could they replace poets? (2020)

Will computer programs replace newspaper columnists?  (2020)

Is Covid causing some structural unemployment? (2020)

Is Covid causing some structural unemployment? (Part 2)
(2020)

McDonald’s Tests Robot Fryers and Voice-Activated Drive-Throughs: Burger giant wants to speed service as competition for fast-food diners mounts (2019)

Is Walmart adding robots to replace workers or because it is hard to find workers? (2019) 

The Robots Are Coming And It Might Not Be A Case of Structural Unemployment  (2018)

Broncos to debut beer-pouring robot at upcoming game (2018)

Robots Are Ready to Shake (and Stir) Up Bars (2018)

Automation Can Actually Create More Jobs  (2016)

Are Computer Programs Replacing Journalists? (2015)

Robot jockeys in camel races (2014) 

Structural Unemployment In The News-Computers Can Now Tell Jokes  (2013)

WHAT do you get when you cross a fragrance with an actor?

Answer: a smell Gibson.

Robot Journalists-A Case Of Structural Unemployment? (2010)

Are Americans Worrying Too Much About Inflation? Two opposing views

First, see I’m an Economist. Don’t Worry. Be Happy. by Justin Wolfers, a professor of economics at the University of Michigan. Excerpts:

"The same inflationary forces that pushed these prices higher have also pushed wages to be 22 percent higher than on the eve of the pandemic. Official statistics show that the stuff that a typical American buys now costs 20 percent more over the same period. Some prices rose a little more, some a little less, but they all roughly rose in parallel.

It follows that the typical worker can now afford 2 percent more stuff. That doesn’t sound like a lot, but it’s a faster rate of improvement than the average rate of real wage growth over the past few decades."

"But in reality, higher prices are only the first act of the inflationary play. It’s a play that economists have seen before. In episode after episode, surges in prices have led to — or been preceded by — a proportional surge in wages."

For the other view, see What Economists Miss About Inflation: Prices aren’t rising as fast as they were in 2022, but consumers tend to have a long time horizon by Robert Pozen and S.P. Kothari. Mr. Pozen is a senior lecturer at the MIT Sloan School of Management and a former chairman of MFS Investment Management. Mr. Kothari is a professor of accounting and finance at MIT Sloan.

"Many economists and political commentators wonder why U.S. consumers continue to feel they are suffering from inflation, although the annual rate of inflation dropped sharply during 2023 and is still well below its peak in the summer of 2022.

The answer is that consumers have a broader time horizon. They are looking at the rate of price increases over the past three years. From January 2021 to January 2024, the consumer price index for all items rose by 17.96%.

A concrete example: You paid $10 for a tuna sandwich at a takeout lunch place at the start of 2021. By the start of 2024, the same tuna sandwich cost $11.80. That certainly feels like severe inflation. It wouldn’t be much comfort if an economist told you that you should feel good because the price of the tuna sandwich rose by only 3.11% in the last year, from $11.45 to $11.80.

Moreover, in 2021 no one was asking for a tip. Since the pandemic, it has become common for payment screens at takeout places to prompt customers for a gratuity of as much as 25%. You can say no, but at the risk of a scowl from the cashier.

Economists might argue that consumers should be satisfied because their wages rose over those three years. But the rise in total wages was only 15.3% during this period, so workers are behind in real terms.

Further, at the beginning of the pandemic, many consumers of moderate or lower income received some type of government grant, such as refundable tax credits for children or unemployment checks that exceeded their prior take-home pay. These grants declined in 2022 and ran out after 2023.

In short, prices are up, wages aren’t keeping pace, and the tuna sandwich that used to cost $10 now costs $13 including a small tip. No wonder consumers feel they are still battling price inflation."

Is Starbucks coffee no longer a Veblen good?

See Heard on the Street: Is That Starbucks Latte Finally Getting Too Expensive? by Spencer Jakab of The WSJ.

"You see an Iced Starbucks Blonde Vanilla Latte that costs $7.25. An economist sees a “Veblen good.”

Part of the secret to the coffee chain’s success and ubiquity has been the fact that it sells coffee not only at a huge markup to the cost of foamy brown water but simply that it costs a lot. Like an expensive handbag, the small luxury of the beverage that could be bought more cheaply elsewhere for the same utility is part of the appeal.

But, with the chain’s share price hitting a one-year low on Wednesday and same-store sales slumping, could it be hitting its limit with some customers? That is one of the interesting conclusions from a proprietary survey by analysts at Deutsche Bank.

“Among the 45% of consumers buying less or no longer buying from Starbucks, the top reason was related to price, with 47% saying ‘it's become too expensive,’ wrote Lauren Silberman’s team. Cost was “well above every other reason indicated.”

A year ago, analysts polled by FactSet saw revenue for the current fiscal year through September of $40.367 billion. That is now down to $38.784 billion. Excluding the year the pandemic hit, the chain is seen having its slowest growth in same-store sales since 2018.

Silberman thinks the slump is temporary and the deflated stock attractive. In addition to price sensitivity, part of the problem might be Starbucks' greater dependence on cold beverages and the fact that those were less desirable during a chilly winter. Spring is here—so it is about time to test that hypothesis."

Also see Veblen Goods by Andrew Loo of CFI (Corporate Finance Institute) . Excerpts:

"Veblen good is a type of luxury good named after American economist Thorstein Veblen. It shows a positive relationship between price and demand [it should say quantity demanded-CM], and thus an upward-sloping demand curve.

The demand [it should say quantity demanded-CM] for a Veblen good rises (drops) when its price increases (decreases). A Veblen good generally is considered a high-quality exclusive product and a status symbol. When the price goes higher, its status symbol makes the Veblen good more desirable to consumers with high social and economic standing. Some common examples of Veblen goods include luxury cars, wines, handbags, fine jewelry and watches and even sneakers."

"Conspicuous consumption is another relevant concept of Veblen goods. It represents the purchase of goods and services to display one’s economic power and social status, motivated by the desire for prestige.

The concept of conspicuous consumption was also identified by Thorstein Veblen in his book The Theory of the Leisure Class (1899). In the practices of conspicuous consumption, a higher price makes a product more desirable for its status symbol, which explains the features of Veblen goods from a sociological perspective."

Adam Smith may have beaten Veblen to the punch. In The Wealth of Nations, he wrote:

"With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eyes is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves. In their eyes the merit of an object which is in any degree either useful or beautiful, is greatly enhanced by its scarcity, or by the great labour which it requires to collect any considerable quantity of it, a labour which nobody can afford to pay but themselves. Such objects they are willing to purchase at a higher price than things much more beautiful and useful, but more common." (the entire book is online)

In Veblen's chapter on "Conspicuous Consumption," there is no mention of Adam Smith. 

There is statistical or empircal evidence that supports Veblen's theory. A Ph. D. student found that rich families do spend more on "Conspicuous Consumption." 

See also Doctoral Thesis Says Rich People Spend More on Conspicuous Things. Excerpts:

"Ori Heffetz, a doctoral student in economics at Princeton University (back in 2005-now he is a professor at Cornell University), has developed the first broad-gauged index of product visibility. Sure enough, he finds in his thesis that conspicuous items make up a greater share of the consumption budget in wealthier families."

"Mr. Heffetz estimated the relationship between the amount spent on each of 29 products and a household's income, using data on 3,924 households from the 1997 Consumer Expenditure Survey, conducted by the Bureau of Labor Statistics. The "income elasticity of demand," defined as the percentage change in consumption for a 1 percent increase in income, summarizes the degree to which a good is a luxury or a necessity. A good is a luxury if a 1 percent increase in income is associated with more than a 1 percent increase in consumption of that good.

Mr. Heffetz's analysis indicates that the higher the visibility of a good, the more likely it is to be a luxury item. For example, spending on cars and jewelry, two highly visible items, rises as a share of a household's budget as its income rises, while spending on home utilities, an inconspicuous category, falls as a share of the budget as income rises."

Related posts:

China's Government Cracks Down On Displays Of Wealth On Social Media (2022)  

(See In China, Bragging About Your Wealth Can Get You Censored: Online posts by users showing off their receipts, over-ordering food or scattering money have been deemed vulgar. Regulators say such content leads young people astray by Vivian Wang and Joy Dong of The New York Times.)

Payless sold its discount shoes for $600 a pair at mock luxury influencer event (2018)

Federal Reserve Economists May Have Discovered Another Cause Of Bankruptcy (if a neighbor wins the lottery people start spending more on consumption to keep up) (2016)

Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!) (2007)

Pay For Performance Increases Performance (Water Runs Downhill)

For teachers in Wisconsin.

By Alex Tabarrok.

"In my 2011 book, Launching the Innovation Renaissance, I wrote:

At times, teacher pay in the United States seems more like something from Soviet-era Russia than 21st-century America. Wages for teachers are low, egalitarian and not based on performance. We pay physical education teachers about the same as math teachers despite the fact that math teachers have greater opportunities elsewhere in the economy. As a result, we have lots of excellent physical education teachers but not nearly enough excellent math teachers. The teachers unions oppose even the most modest proposals to add measures of teacher quality to selection and pay decisions.

As I wrote, however, Wisconsin passed Act 10, a bill that discontinued collective bargaining over teachers’ salary schedules. Act 10 took power away from the labor unions and gave districts full autonomy to negotiate salaries with individual teachers. In a paper that just won the Best Paper published in AEJ: Policy in the last three years, Barbara Biasi studies the effect of Act 10 on salaries, effort and student achievement.

Compensation of most US public school teachers is rigid and solely based on seniority. This paper studies the effects of a reform that gave school districts in Wisconsin full autonomy to redesign teacher pay schemes. Following the reform some districts switched to flexible compensation. Using the expiration of preexisting collective bargaining agreements as a source of exogenous variation in the timing of changes in pay, I show that the introduction of flexible pay raised salaries of high-quality teachers, increased teacher quality (due to the arrival of high-quality teachers from other districts and increased effort), and improved student achievement.

We still have a long way to go but COVID, homeschooling and universal voucher programs have put a huge dent in the power of the teacher’s unions. There is now a chance to bring teacher pay into the American model. Moreover, such a model is pro-teacher! Not every district in Wisconsin grasped the opportunity to reform teacher pay but those districts that did raised pay considerably. Appleton district, for example, instituted pay for performance, Oshkosh did not. Prior to the Act salaries were about the same in the two districts:

After the expiration of the CBAs, the same teacher could earn up to $68,000 in Appleton, and only between $39,000 and $43,000 in Oshkosh.

Thus, pay for performance is a win-win policy. Paying the best teachers more is good for teachers and great for students who see increases in achievement which pay off many years later in higher wages."

Why Economics Is Really Called 'the Dismal Science': The (not-so-dismal) origin myth of a ubiquitous term

By Derek Thompson of The Atlantic Monthly. From 2013.

"The story goes like this: Thomas Carlyle, a Scottish writer and philosopher, called economics "the dismal science" in reference to Thomas Malthus, that lugubrious economist who claimed humanity was trapped in a world where population growth would always strain natural resources and bring widespread misery. Dismal, indeed.

But this origin myth is, well, mythical. Carlyle did coin the phrase "the dismal science." And Malthus was, without question, dismal.

But Carlyle labeled the science "dismal" when writing about slavery in the West Indies. White plantation owners, he said, ought to force black plantation workers to be their servants.

Economics, somewhat inconveniently for Carlyle, didn't offer a hearty defense of slavery. Instead, the rules of supply and demand argued for "letting men alone" rather than thrashing them with whips for not being servile. Carlyle bashed political economy as "a dreary, desolate, and indeed quite abject and distressing [science]; what we might call ... the dismal science.”

Today, when we hear the term "the dismal science," it's typically in reference to economics' most depressing outcomes (e.g.: on globalization killing manufacturing jobs: "well, that's why they call it the dismal science," etc). In other words, we've tended to align ourselves with Carlyle to acknowledge that an inescapable element of economics is human misery.

But the right etymology turns that interpretation on its head. In fact, it aligns economics with morality, and against racism, rather than with misery, and against happiness. Carlyle couldn't find a justification for slavery in political economic thought, and he considered this fact to be "dismal." Students of economics should be proud: Their "science" was then (as it can be, today) a force for a more just and, crucially, less dismal world."

The Seasonally Adjusted CPI Was up 0.38% in March

See Consumer Price Index for All Urban Consumers: All Items in U.S. City Average from FRED (Federal Reserve Economic Data) compiled by the Research Division at the Federal Reserve Bank of St. Louis for data on the seasonally adjusted CPI.

That site shows a graph but if you click on the Download button you will get the actual numbers in Microsoft Excel.

The Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL) was 311.054 in Feb. and 312.230 in March. Since 312.230/311.054 = 1.0038, that means it was up 0.38% in Feb. If we had that every month for 12 months it would be up 4.63%.

It was 301.744 in March 2023. Since 312.230/301.744 = 1.035, that means it was up 3.5% over the last 12 months.

The non-seasonally adjusted CPI was 312.332 in March and 301.836 in March 2023. That was up 3.5%. So pretty close to the seasonally adjusted CPI. This is still above the Fed's target of 2.0% (although they prefer to use the Personal Consumption Expenditures Price Index which was 2.5% higher in Feb. 2024 than Feb. 2023).

For more information, see Consumer prices rose 3.5% from a year ago in March, more than expected by Jeff Cox of CNBC. Excerpts: 

"The consumer price index accelerated at a faster-than-expected pace in March, pushing inflation higher and likely dashing hopes that the Federal Reserve will be able to cut interest rates anytime soon.

The CPI, a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%, or 0.3 percentage point higher than in February, the Labor Department’s Bureau of Labor Statistics reported Wednesday. Economists surveyed by Dow Jones had been looking for a 0.3% gain and a 3.4% year-over-year level.

Excluding volatile food and energy components, the core CPI also accelerated 0.4% on a monthly basis while rising 3.8% from a year ago, compared with respective estimates for 0.3% and 3.7%"

The article also discusses what is going up and what is going on. There is a graph of the monthly year-over-year percent change in prices and core prices going back almost 3 years.

Other related links:

Consumer Price Index Data from 1913 to 2023

Personal Consumption Expenditures Price Index 

The Bureau of Labor Statistics makes seasonal adjustments. See Consumer Price Index Summary.

Handbag authenticators (creative destruction and how the economy just keeps creating new types of occupations & professions)

I've posted about many new jobs like this. See related posts below. 

Also, this post is based on yesterday's post You Spent $6,000 on a Secondhand Chanel Bag. Now Find Out if It Is Real. It had excerpts from an article by Chavie Lieber of The WSJ. Here are excerpts related to today's post:

"Many secondhand luxury shoppers say [Zekrayat] Husein, a 43-year-old Palestinian mother of three and a former aesthetician who goes by the nickname Zeko, is the Coco Chanel of authentication. She has evaluated over 25,000 Chanel bags since she started her business in 2019, she said. She authenticates hundreds of bags a week." 

"Most of her clients, who are buying used Chanel bags from boutiques or online resellers, will email Husein photos of their purchase, taking close-ups of stitching, hardware, and interiors. Husein charges $50 for her authenticity certificate based on photos and also does in-person inspections for $100."

There "is a cottage industry of independent authenticators who can easily tell a counterfeit from the real McCoy."

Related posts: 

Who wrote your potential love's online dating profile? (maybe they outsourced it to a professional who specializes in that) (2016)

New Profession Of "Wedding Hashtag Helper" Might Be An Example Of Creative Destruction At Work (2022)

Are dating coaches who help you with texting modern Cyrano de Bergeracs? (2023)

Do You Need a Fixer for Your Disney Vacation? Third-party companies tout advanced knowledge for private tours of complex amusement parks that can cost $1,000 and up (2023)

Parents Hire $4,000 Sorority Consultants to Help Daughters Dress and Impress During Rush (creative destruction and how the economy just keeps creating new types of occupations & professions) (2023)

Prompt engineers chat with generative-AI chatbots (creative destruction and how the economy just keeps creating new types of occupations & professions) (2023)

"Wedding content creators" curate the perfect social-media-ready images of the nuptials and celebration (creative destruction and how the economy just keeps creating new types of occupations & professions) (2023)

 

"Independent education consultants" help high school students and their parents navigate the competitive college-admissions process (creative destruction and how the economy just keeps creating new types of occupations & professions) (2024)

"Robot Wranglers" help lost and confused automatons (creative destruction and how the economy just keeps creating new types of occupations & professions) (2024)

Professional Bridesmaids (creative destruction and how the economy just keeps creating new types of occupations & professions)  (2024)

 

Creative Destruction

See Creative Destruction by Richard Alm and W. Michael Cox. Excerpt:

"Joseph Schumpeter
(1883–1950) coined the seemingly paradoxical term “creative destruction,” and generations of economists have adopted it as a shorthand description of the free market’s messy way of delivering progress. In Capitalism, Socialism, and Democracy (1942), the Austrian economist wrote:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. (p. 83)

Although Schumpeter devoted a mere six-page chapter to “The Process of Creative Destruction,” in which he described capitalism as “the perennial gale of creative destruction,” it has become the centerpiece for modern thinking on how economies evolve."

But also see this link which suggests that the idea goes back even before Schumpeter to other scholars: Creative Destruction in Economics: Nietzsche, Sombart, Schumpeter by Hugo Reinert and Erik S. Reinert.

"Abstract

This paper argues that the idea of ‘creative destruction’ enters the social sciences by way of Friedrich Nietzsche. The term itself is first used by German economist Werner Sombart, who openly acknowledges the influence of Nietzsche on his own economic theory. The roots of creative destruction are traced back to Indian philosophy, from where the idea entered the German literary and philosophical tradition. Understanding the origins and evolution of this key concept in evolutionary economics helps clarifying the contrasts between today’s standard mainstream economics and the Schumpeterian and evolutionary alternative."

You Spent $6,000 on a Secondhand Chanel Bag. Now Find Out if It Is Real.

Handbag authenticators are cashing in on buyers’ anxieties about fakes; hardware must be champagne not bronze; that pink leather is only made in France.

By Chavie Lieber of The WSJ. Excerpts:

"Many secondhand luxury shoppers say [Zekrayat] Husein, a 43-year-old Palestinian mother of three and a former aesthetician who goes by the nickname Zeko, is the Coco Chanel of authentication. She has evaluated over 25,000 Chanel bags since she started her business in 2019, she said. She authenticates hundreds of bags a week." 

"Chanel bags sold in Japan from 1985 through 2016 have the bag’s date of purchase and boutique initials inside; that Chanel’s MSHLG (metal shiny light gold) hardware is closer to champagne than bronze, while its MPY (or metal pale yellow) has a darker tone of yellow; that Chanel classic medium flap bags in colors other than black are exclusively made in France and never in Italy; that 10218184 is the serial number counterfeiters use the most."

"Most of her clients, who are buying used Chanel bags from boutiques or online resellers, will email Husein photos of their purchase, taking close-ups of stitching, hardware, and interiors. Husein charges $50 for her authenticity certificate based on photos and also does in-person inspections for $100."

There "is a cottage industry of independent authenticators who can easily tell a counterfeit from the real McCoy. But their jobs have gotten harder as the quality of fakes has reached new heights, so even high-end consignees may end up unwittingly selling knockoffs. Return fraud, where customers buy real luxury goods, then get refunds by returning fake ones, also plagues the primary market."

"Husein sometimes works as an intermediary between a buyer and seller, verifying the authenticity of a bag before a purchase. She said she’s gone head-to-head with banks, insurance companies and resale marketplaces to help customers who were sold counterfeits get their money back."

"Of the average 50 bags she reviews a day, around 10 are counterfeits"

"“They [master fakes] use the exact same leather as Chanel,” she said of the brand’s high-quality lambskin materials."

"Others who have turned their love of luxury into a marketable skill include Paola Tapia, 35, an Atlanta-based authenticator who checks Chanel, Louis Vuitton and Gucci goods for boutiques in the area and for shoppers online. Michelle Peeters, a 38-year-old reseller and authenticator in Brooklyn, N.Y., said she examines around 30 Chanel bags a week.

There are tools of the trade for verifying the authenticity of a handbag. Tapia authenticates with Entrupy, a piece of software that compares photos taken with a micro-lens gadget to those in a database. Laura Chavez-Sainz, senior authentication manager of Fashionphile, a luxury-resale site, said she likes to use a jeweler’s loupe, flashlight and dental tools."

"'Like Husein, [Michelle ] Peeters also entered the authentication world as a reseller in 2009. Touching and seeing bags helped her become well versed in Chanel’s language. She co-moderates a Chanel Facebook group with over 130,000 members and began authenticating Chanel bags in 2020. She charges $35 for certificates."

"Chanel is cracking down on the secondary market, alleging that vintage dealers are engaging in counterfeit sales. In February, Chanel won a lawsuit against the website and New York boutique What Goes Around Comes Around; a jury ruled Chanel was owed $4 million in damages related to counterfeiting."

"Megs Mahoney Dusil, co-founder of the handbag site PurseBlog, said she’s noticed more Chanel fans gravitating to smaller, independent resellers, making services from Husein or Peeters more in demand. Shoppers feverishly swap stories on blogs and social media about counterfeits sold on big sites." 

"Authenticators are also on the lookout for return fraud. There are some telltale signs, like sellers listing multiples of the same bag or items with tags. When Fashionphile noticed that a seller was doing this with Gucci bags, it flagged the seller internally and rejected her sales, said Chavez-Sainz. Fashionphile also contacted the store whose receipts the seller had shared as proof of authenticity. The store said it was building a case against the seller because she was bait-and-switching the bags."

Related posts:

Fake Books Are a Real Trend (and people pay money for them) (2023)

Job Listings Abound, but Many Are Fake (2023)

You can hire someone to do the job interview for you (2022)

How to Spot Fake Reviews and Shady Ratings on Amazon (2022)

Making Money Off of Fake ATM Receipts (2021)

People are hiring out their faces to become deepfake-style marketing clones (2021)

Why would men bring fake cell phones to bars? (2021)

Are sellers paying Amazon customers to delete negative reviews? (2021)

Fake Reviews and Inflated Ratings Are Still a Problem for Amazon  (2021)

Photos show China's most surreal tourist spot— a fake Instagram-worthy town full of pretend farmers and phony fishermen (2021)

The Myth of Authenticity Or The Story Behind Products (2010)

Fake Authenticity (2011)

Students: Make a mistake on purpose, its good for you! (2007)

A fake job reference can be just a few clicks away (2015)

Fake Economist Fools Portugal (2013)

Slave Redemption in Sudan (2007) (Fake slaves are sold to those who buy slaves and then give them their freedom)

Can A Product Work Just Because It's Expensive? (2008) (fake medicine)

If It Pays To Have Friends, Can You Pay To Have Friends? (2013) (you can hire fake boyfriends)

Study: Half of American Doctors Give Patients Placebos Without Telling Them (2008)

Saudis grapple with fake street sweepers (2017)

Rent a White Guy: Confessions of a fake businessman from Beijing (2010) (by Mitch Moxley in The Atlantic Monthly, excerpts below)

Can adding a phantom third story to their homes help families find a wife for their son? (2018)

Why do employers pay extra money to people who study a bunch of subjects in college that they don’t actually need you to know? Signaling (2018)

Mexicans buy fake cellphones to hand over in muggings (2019)
 
Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!) (2007)

How does a company selling used luxury goods spot fakes? (signalling and conspicuous consumption) (2019).

Why do stores sometimes pay people to be fake shoppers?  (2019)

What if companies can't afford real models for their ads? Use AI generated fake pictures  (2020)

Excerpts from "Rent a White Guy"

"NOT LONG AGO I was offered work as a quality-control expert with an American company in China I’d never heard of. No experience necessary—which was good, because I had none. I’d be paid $1,000 for a week, put up in a fancy hotel, and wined and dined in Dongying, an industrial city in Shandong province I’d also never heard of. The only requirements were a fair complexion and a suit.

“I call these things ‘White Guy in a Tie’ events,” a Canadian friend of a friend named Jake told me during the recruitment pitch he gave me in Beijing, where I live. “Basically, you put on a suit, shake some hands, and make some money. We’ll be in ‘quality control,’ but nobody’s gonna be doing any quality control. You in?”

I was.

And so I became a fake businessman in China, an often lucrative gig for underworked expatriates here. One friend, an American who works in film, was paid to represent a Canadian company and give a speech espousing a low-carbon future. Another was flown to Shanghai to act as a seasonal-gifts buyer. Recruiting fake businessmen is one way to create the image—particularly, the image of connection—that Chinese companies crave. My Chinese-language tutor, at first aghast about how much we were getting paid, put it this way: “Having foreigners in nice suits gives the company face.”

Six of us met at the Beijing airport, where Jake briefed us on the details. We were supposedly representing a California-based company that was building a facility in Dongying. Our responsibilities would include making daily trips to the construction site, attending a ribbon-cutting ceremony, and hobnobbing. During the ceremony, one of us would have to give a speech as the company’s director. That duty fell to my friend Ernie, who, in his late 30s, was the oldest of our group. His business cards had already been made."

"For the next few days, we sat in the office swatting flies and reading magazines, purportedly high-level employees of a U.S. company that, I later discovered, didn’t really exist."